Tribunal’s ruling welcome relief to small business prevented from JobKeeper

Tribunal’s ruling welcome relief to small business prevented from JobKeeper

Covid-19 continues to disrupt business operations, creating an uncertain environment for business owners to trade within. In response to the drastic impact of Covid-19 on the Australian economy, the Federal Government introduced the JobKeeper scheme to support small businesses and combat unemployment. Whilst many businesses have benefited greatly from the scheme, some were excluded from Commonwealth support as they failed to meet the eligibility criteria. The recent case of Apted v Commissioner of Taxation considered the requirement for businesses to have an active Australian Business Number (ABN) when applying for the JobKeeper package; the Tribunal finding that the purpose of the scheme was to support businesses and arbitrary eligibility requirements were contrary to this objective.

Overview

Mr Adept was the sole trader of a small business where he worked as an expert valuer in rental disputes up until July 2018 at which point he retired. As such, he cancelled his GST and ABN registration effective June 2018. However, after he decided retirement wasn’t for him, in September of 2019 Mr Apted was engaged to provide services for the odd client. He mistakenly assumed that he was not required to reactivate his ABN as he did not anticipate to make more than $75 000 per year and did not think he needed to be registered for GST or an ABN.

At the end of March 2020, Mr Apted applied to have his ABN reactivated, which was reinstated by the Registrar with a date of effect of 31 March 2020. He then subsequently applied for a JobKeeper payment in April 2020, but his application was rejected as he was deemed ineligible due to his inactive ABN at the 12 March 2020 cut-off date. Mr Apted then contacted the Registry and had his ABN retrospectively backdated to be effective from July 2019 after which he appealed the decision with the Commissioner. His claim again failed on the basis of ineligibility and Mr Apted subsequently escalated the decision of the Commissioner to the Administrative Appeals Tribunal of Australia.

Eligibility Requirements for JobKeeper

There are several requirements set out in the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth) that must be met in order for a business to qualify for JobKeeper payments. These include:

  • At 1 March 2020, the entity was an active business; not for profit operating primarily in Australia; or a deductible gift recipient.
  • The entity employed at least one eligible employee during the JobKeeper fortnight being applied for.
  • The entity satisfies the original decline in turnover test: which is generally satisfied when an entity’s projected GST turnover for the test period falls short of current GST turnover for the relevant comparison period by the specified percentage (normally 30%). There are alternative tests for businesses started in 2020 before March 1.
  • The entity satisfies the actual decline in turnover test: which is generally satisfied when an entity’s actual GST turnover for the test period falls short of the relevant comparison period, by specified short fall percentage (normally 30%).
  • The entity satisfies the integrity rules: have an ABN that was active on 12 March 2020; and an amount was included in the entity’s assessable income for 2018-19 income in relation to the business or the entity made a taxable supply in a tax period between July 2018-12 March 2020.

Decision of the Administrative Appeals Tribunal of Australia

In its decision, the Tribunal considered the purpose of the JopKeeper scheme as a mechanism for providing necessary and accessible support to small business owners. The Tribunal found that the Integrity Rule containing the requirement for an active ABN at 12 March 2020 was contemplated by the government as putting trust in the Registrar and the ABN process, rather than a fixed deadline. As a result, where the Registrar decides to use its discretion to retrospectively date an ABN, this does not vitiate the integrity of the ABN for the purposes of JobKeeper eligibility. The Tribunal found in favour of Mr Apted, and reiterated the need for JobKeeper to remain a streamlined and attainable scheme for Australian businesses.

It is worth noting that that the ATO has confirmed that they have lodged an appeal against the decision in the Federal Court of Australia and the possible future implications of this decision remain unclear. However, the ATO maintains the AAT’s decision has not changed the need to satisfy all of the other eligibility conditions.

Other Recent JobKeeper Updates

From the 28th of September 2020, businesses and non-for-profits seeking to claim JobKeeper payments to March 2021 must reassess their eligibility with reference to their actual turnover in the December quarter and demonstrate the required decline turnover test has been met. Further, from January 4th the payment amount has decreased to $1,000 per fortnight for eligible employees and business participants working for 20 hours or more a week on, and $650 per fortnight for employees and business participants who were working for less than 20 hours a week.

How do I check the status of my ABN?

An Australian Business Number is a unique identifier that enables your business to identify itself, avoid PAYG tax, and claim GST credits. It is important as the owner of a small business that you are able to check the status of your ABN and reactivate it before expiry. You can apply or reapply online for an ABN through the Australian Business Register website, and once your application is successful your details will be added to the Australian Business Register. The Register contains the status of all ABN’s including their expiration date. Once you have obtained an ABN it is important you keep your details up to date in the Register, as this is how you will be contacted when your ABN is due for renewal. If you do not receive a notice of renewal, or unsure about the status of your ABN you may need to seek out further assistance.

Further Information

Matters such as these highlight the importance of seeking expert legal and taxation advice when conducting a small business. Mr Adept himself acknowledged his misunderstanding of ABN requirements was because he failed to obtain proper advice. If you are the owner of a small business, and want to understand more about your eligibility for JobKeeper payments or about the implications of an ABN for your business, do not hesitate to contact us on 9963 9800 or via our contact form.

Modern Awards – An Update, June 2020

Modern Awards – An Update, June 2020

Several modern awards have been significantly varied by the Fair Work Commission (‘FWC’) to grant businesses and employees temporary measures to preserve the ongoing viability of businesses and jobs during the COVID-19 pandemic. In addition to the unpaid pandemic leave and annual leave flexibility that has varied over 99 awards since 8 April 2020, the NSW Government has inserted provisions in the Long Service Leave Act 1955 (NSW) relating to pandemic leave. Employers should become familiar with these important industry award changes which we will outline below.

Changes to Modern Awards in 2020

The Tranche 2 awards, including the following listed below, have been finalised and will come into effect from the 29 May 2020. In addition to unpaid pandemic leave, the following changes have been inserted that are temporary and will be reviewed on 30 June 2020:

1. Clerks — Private Sector Award 2010

Operational flexibility: employees can be asked by their employers to do any tasks that they have skill and competency for, even if they are not in their usual classification or normal work, given that the employee has the appropriate licenses and qualifications. If an employee is told to work above their usual classification for more than one day, they must be compensated by being paid at a higher rate.

Work from home agreements: Part-time employees can agree to have minimum engagements reduced from 3 hours per shift to 2 hours. Casual employees can agree to be paid for a minimum 2 hours’ work shift instead of 3 hours.

Ordinary hours change while working at home: Agreements can be made to allow employees to work between 6am to 11pm on Monday to Friday, and 7am to 12.30pm on Saturday.

Reduced hours: Any employee who has had their hours reduced can ask their employer for permission to find more work with another employer and/or access training, professional development and study leave through their employer.

See determination for further information.

2. Hospitality Industry (General) Award 2010 and Restaurant Industry Award 2010

Operational flexibility: An employee can perform any duties within their skill and competency provided that they are licensed and qualified to perform them. Employees engaged to perform higher duties must be compensated at a higher rate than their ordinary classification.

Working hours: An employer may direct a full-time employee to work an average of between 22.8 and 38 ordinary hours per week and be paid on a pro-rata basis. An employer may direct a part-time employee to work an average of between 60% and 100% of their guaranteed hours per week (over the roster cycle).

Annual Leave: An employer may, subject to considering an employees’ personal circumstances, direct the employee to take annual leave with 24 hours notice.

See determination for the Hospitality Industry Award and the determination for the Restaurant Industry Award.

3. Educational Services (Schools) General Staff Award

Temporary reduced hours: An employer may issue a notice of intention in writing to direct an employee to reduce their ordinary hours by up to 25%. The direction will come into effect 5 days after the notice of intention was issued and will remain in force for a period of no more than 12 weeks.

Operational flexibility: An employee can perform any duties within their skill and competency provided that they are licensed and qualified to perform them. Employees engaged to perform higher duties must be compensated at a higher rate than their ordinary classification.

Other awards that have been varied include the Rail Industry Award, Contract Call Centres Awards and Manufacturing and Associated Industries and Occupations Award. See what other awards have changed in 2020 here.

Considerations for Employers

Employers must be aware of their changing obligations surrounding unpaid pandemic leave and any other laws, such as those relating to the JobKeeper subsidy. The greater flexibility in relation to job roles and duties, work hours and leave under some awards is a positive development towards enabling businesses to meet the challenges caused by the pandemic. However, employers must proceed with caution to ensure that their work agreements comply with these award variations.

Further Information

For further assistant on any matter relating to work from home policies or any workplace matter, please contact one of our experience employment and litigation solicitors on 02 9963 9800 or [email protected].